Clarifying Health care terms: What is an out-of-pocket maximum?

Chalkboard_HealthIns101.1

We all know that health care terms can get very confusing. One such term is out-of-pocket maximum (OOPM). Once you understand what it means you also need to understand how it affects you and your family, and the health plan you choose.

Out-of-pocket maximum or OOPM means

Your expenses for medical care that aren’t reimbursed by insurance. Out-of-pocket costs include deductibles, co-insurance, and co-payments for covered services plus all costs for services that aren’t covered.

OOPM is the most you will have to pay for expenses under your health insurance plan during the year. However, the OOPM is different for every type of plan.

The maximum out-of-pocket costs for any Marketplace plan (www.healthcare.gov) for 2015 are $6,600 for an individual plan and $13,200 for a family plan. This means when the amount you’ve paid in deductibles, co-payments, and co-insurance reaches these limits, your insurance company pays 100% of your costs for covered care. Even if you choose a catastrophic coverage plan your out-of-pocket costs shouldn’t exceed this limit.

How does this work? Take a look at this example:

Mary’s plan has a $6,000 out-of-pocket maximum, which is the most Mary will have to pay for covered medical expenses this year. If Mary stays healthy, she may only pay for a few doctor visits and prescriptions. If she has an accident or major illness, either could result in costly hospital bills. Since Mary has health insurance and stays in network, she won’t have to pay more than $6,000 for covered expenses this year, even if her care costs more than that.

Here’s how it works: Let’s say Mary had an accident and the total cost is $12,000.

Her copay is = $250
Her co-insurance is 20% = $2400
Mary’s responsibility is $12,000 – ($250+$2,400) = $9350
Her Out of Pocket Maximum = $6000 is what she will have to pay NOT the $9350

However, if you go out of your network for services, those expenses may not count toward your OOPM, so you could have to pay more

Before you choose a health insurance plan, it’s extremely important that you consider your plan’s doctor network and your financial responsibilities.

Think about your health care needs when choosing a category of Marketplace plan.

  • If you expect a lot of doctor visits or need regular prescriptions: You may want a Gold plan or Platinum plan, which generally have higher monthly premiums but pay more of your costs when you need care.
  • If you don’t expect to use regular medical services and don’t take regular prescriptions: You may want a Silver, Bronze, or Catastrophic plan. These plans cost you less per month, but pay less of your costs when you need care.
  • If you qualify to save on out-of-pocket costs: Silver plans may offer the best value. You may qualify for lower out-of-pocket costs based on your household size and income.
  • If you do qualify, you can get these out-of-pocket savings only if you enroll in a Silver plan. If you make this choice you’ll basically get the lower out-of-pocket costs of a Gold or Platinum plan while paying a Silver plan premium.
  • If you’re under 30 or have a hardship exemption and want low monthly premiums: You may want to choose a catastrophic plan designed to protect you from worst-case scenarios, like serious accidents or diseases.

Of course, it’s impossible to predict all your health care needs for the year ahead because the unexpected can happen. However, pick a plan that fits your budget and meets your and your family’s expected needs.

For more information visit www.healthcare.gov.